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Q-3. The following equations describe an economy Consumption function Disposable Income Tax Function Investment Function Exogenous Government Expenditure C-20+0.75Yd Ya Y-T T=0.2Y I-500-15i G=400 M=10+0.1Y E=260 Mt-0.25Y Ma-125-50i Ms 250 Import Function Export Function Transactions demand for money Speculative demand for money Supply of money a. Derive the IS and LM curves b. Find the equilibrium income and interest rate c. Find the equilibrium trade balance d. What will be the change in equilibrium investment if the exogenous expenditure is increased by 115? [10] 2/3

Q-3. The following equations describe an economy Consumption function Disposable Income Tax Function Investment Function Exogenous Government Expenditure C-20+0.75Yd Ya Y-T T=0.2Y I-500-15i G=400 M=10+0.1Y E=260 Mt-0.25Y Ma-125-50i Ms 250 Import Function Export Function Transactions demand for money Speculative demand for money Supply of money a. Derive the IS and LM curves b. Find the equilibrium income and interest rate c. Find the equilibrium trade balance d. What will be the change in equilibrium investment if the exogenous expenditure is increased by 115? [10] 2/3

MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN:9781337794985
Author:Baumol
Publisher:Baumol
Chapter8: Aggregate Demand And The Powerful Consumer
Section: Chapter Questions
Problem 8DQ
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Q-3. The following equations describe an economy Consumption function Disposable Income Tax Function Investment Function Exogenous Government Expenditure C-20+0.75Yd Ya Y-T T=0.2Y I-500-15i G=400 M=10+0.1Y E=260 Mt-0.25Y Ma-125-50i Ms 250 Import Function Export Function Transactions demand for money Speculative demand for money Supply of money a. Derive the IS and LM curves b. Find the equilibrium income and interest rate c. Find the equilibrium trade balance d. What will be the change in equilibrium investment if the exogenous expenditure is increased by 115? [10] 2/3
Transcribed Image Text:Q-3. The following equations describe an economy Consumption function Disposable Income Tax Function Investment Function Exogenous Government Expenditure C-20+0.75Yd Ya Y-T T=0.2Y I-500-15i G=400 M=10+0.1Y E=260 Mt-0.25Y Ma-125-50i Ms 250 Import Function Export Function Transactions demand for money Speculative demand for money Supply of money a. Derive the IS and LM curves b. Find the equilibrium income and interest rate c. Find the equilibrium trade balance d. What will be the change in equilibrium investment if the exogenous expenditure is increased by 115? [10] 2/3
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